Ukraine’s SCM Sees Markets Improve for Metal, Mining in 2014

System Capital Management JSC, a Ukrainian company whose activities include metals, mining, and machine building, will benefit from “favorable” global economic growth, said the head of investor relations.

SCM, owned by the former former Soviet republic’s country’s richest man, Rinat Akhmetov, will sell more of its steel, energy output and mining machines abroad in 2014 as Europe and the U.S. solidify their recoveries and China’s economy will expand about 7.5 percent, said IR Director Jock Mendoza Wilson in a Kiev interview on Nov. 12.

“The environment we might expect to see externally in 2014 is actually likely to be a little bit more favorable,” compared with the two preceding years, Mendoza Wilson said.

Ukraine’s economy entered its third recession since 2008 in the previous quarter as global demand for its products, mainly metals and chemicals, declined. Industrial production fell 4.7 percent in October from a year before, the statistics office said on Nov. 18.

The Donetsk, Ukraine-based SCM controls more than 100 companies in metals and mining, energy production, machine building, banking, communications and other areas. Its main exports are steel, electricity and mining machines.

Metinvest, the metals and mining division of SCM, reported crude steel output in the first half of this year dropped 8 percent to 6.2 million tons.

SCM’s energy units will see an increase in production as its metals and mining units increase capacity and modernize factories, Mendoza Wilson said.

Fitch on Nov. 13 downgraded 11 Ukrainian companies, including DTEK and Metinvest, following a cut in the nation’s sovereign ratings to six levels below investment grade. It cited weaker economy growth and a “deteriorating business environment” that may affect companies.

To contact the reporter on this story: Kateryna Choursina in Kiev at kchoursina@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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